NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, May 3, 2000

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[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): Colleagues, I call the meeting to order in accordance with our order of reference from the House of Commons of Tuesday, February 29, 2000, consideration of the main estimates for the fiscal year ending March 31, 2001, and report on plans and priorities, part III, votes 1, 5, 15, 20, 25, and 30 under Natural Resources.

I am pleased to welcome today the minister, the Honourable Ralph Goodale, and his staff: the deputy minister, Peter Harrison; Dr. Everell; and Mr. Bruce Holden.

Mr. Minister, I know you're a practised parliamentarian, so you know the procedures by which we operate. This committee operates more or less like the others except that it's a little bit more fluid. You can of course direct your comments to the committee members, when they settle down, for about 10 minutes and maybe leave the rest of the hour for questions and answers. You can go over your time, but we'd prefer you didn't. Then we'll take it from there.

Hon. Ralph E. Goodale (Minister of Natural Resources, Lib.): Thank you very much, Mr. Chairman. It's a pleasure to be back with the committee once again, this time dealing with the estimates and specifically those items of interest that flow from the most recent budget.

What I would like to focus on in my opening remarks today is the subject of innovation, because that is the theme that really runs through many of the main estimates insofar as they relate to Natural Resources Canada. At its heart innovation is an individual's desire to improve, to invent, and to push the envelope. The continuous search for new and better ways to do things has driven Canadian society socially, politically, and economically throughout our history, and it's that thirst for innovation that will carry us into the next period of development as we open this new century.

Mr. Chairman, as I have observed before this committee on other occasions, too often Canada's natural resources sectors—our energy, mining, and forest industries and our geoscience sectors—are branded as somehow being outside of this bold new realm of innovation, the so-called dot-com economy. According to some in the media and some in the investment community, the natural resources sectors are depicted as relics of the old economy, more of historical value than of any real future importance. That is obviously a proposition with which I fundamentally disagree, as I have indicated to the committee before. I think we all have to work very hard together to explode those outdated myths about the natural resources sectors of our country and to position those sectors as very much a part of the knowledge-based and technology-driven new economy of the 21st century, which indeed they are.

The Speech from the Throne, I'm happy to say, made some very good progress in that new positioning of the natural resources sector. The budget in February moved the yardsticks again, indicating that innovation was fundamental to the future of natural resources and making some specific commitments in relation to innovation with regard to resources. The main estimates further underscore the importance of innovation.

It's interesting, I think, to note that more than two-thirds of my department's annual budget is devoted in one way or another to scientific activity, some of it in-house, within the labs and other facilities of Natural Resources Canada itself, and some of that scientific and research activity taking place outside of the confines of Natural Resources Canada with a vast array of external partners, either academic institutions, the private sector, or other research facilities.

We are indeed on the cutting edge of science and technology. The new ideas and methods being developed today by the resource industries of Canada will generate economic growth and environmental solutions—in other words, genuine sustainable development—for many, many years to come.

When I was last before you, I touched briefly on the economic importance of our natural resources sectors, and I think it is a message worth repeating very briefly.

Altogether Canada's forestry, mining, energy, geomatics, and related industries account for more than 11% of our gross domestic product for Canada. These sectors directly employ 780,000 Canadians, and indirectly about an equal number of jobs are generated by these sectors. They account for 22% of all new capital investment in the country every year. Five of Canada's ten leading industries in GDP per hour are resource-based industries. Our natural resources are responsible for close to $100 billion annually in exports and a favourable trade surplus of $60 billion.

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If we are to maintain this kind of impressive performance, if we are to refute the claims that the natural resources sectors are rapidly diminishing in value and importance in this new knowledge-based economy, that they somehow lack high-quality human talent, entrepreneurial spirit, or intellectual capital, then never-ending innovation is going to be absolutely crucial.

I'm pleased to note a new innovation that has just appeared in the stock markets over the last number of months: the creation of what is called the Dow Jones sustainability index, which ranks a large number of leading corporations around the world in terms of their sustainable development performance as well as their economic performance. That index, which is a brand new innovation on the stock markets, demonstrates that with progressive, forward-thinking management, companies can in fact perform very well on both the sustainability side of the equation and the economic side of the equation.

In the top rank of that new Dow Jones index there are 18 companies listed. Four of them are Canadian. All four are resource-based companies. Three represent the energy sector of Alberta: Suncor, Enbridge, and TransAlta. The fourth is Dofasco from Ontario. Those companies are obviously performing exceptionally well to receive the ranking they have from Dow Jones.

As we enter this new millennium, Canada, in my view, must be nothing less than the world's smartest natural resources steward, developer, user, and exporter. That means for all of us the most high-tech, the most environmentally friendly, the most socially responsible, and the most productive and competitive, leading the world as a living model of sustainable development.

Innovation is the blueprint for achieving that vision. Despite what some people might believe, the brain power, the skills, the business and industrial processes, and the new research and science required in and of our natural resources industries are every bit as sophisticated as in any other.

You may have seen in the newspapers a bit of a debate I've been having with one of the analysts who works for the Nesbitt Burns firm, Ms. Sherry Cooper, who has taken what I think is an unfortunate view with regard to the performance of our natural resources industries. I have written a response to Ms. Cooper, which I think and hope sets the record straight, and I have some copies of that with me today for committee members, if you would be interested in that topic. I certainly would invite your interest and your cooperation in making sure Canadians have an accurate picture of how progressive and sophisticated our resource-based industries are.

Innovation partnerships with industry and others have already given us such things as fuel cells, low-carbon alternative fuels, satellite mapping, geospatial data on the Internet, digitized robotics, climate-friendly cement substitutes, 3-D seismic imaging of ore bodies, forestry genomics, new engineered wood products, less intrusive mineral and metal extraction, and mine site remediation technology. Those are some of the things we already have.

In terms of the future, we as a government together with others, including the private sector, are investing in a new petroleum technology research centre that will be especially focused on the new technological solutions of the future with regard to heavy oil.

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We're developing a new emphasis with respect to Canadian lightweight materials research. This can be very important to us in relation to a challenge like climate change, for example. Vehicle weights can be reduced by 40% with this new science of lightweight materials, to meet Canada's energy efficiency and environmental goals.

I think also of the very progressive work being done by the Geological Survey of Canada. It became a founding partner, not very long ago, in the Canada-Nunavut geoscience office, along with Indian Affairs and Northern Development Canada and the Government of Nunavut, branching into a whole new field of exploration in the north.

Our work on climate change is probably one of the very best examples of how, in the natural resources sectors, we can marry strong environmental and social performance with strong economic performance. The linchpin to being able to do that, the connector here, is innovation.

It's for that reason that we are supporting initiatives like the new International Test Centre for Carbon Dioxide Capture, which is being supported also by the Governments of Alberta and Saskatchewan and a long list of companies from the electrical, oil, gas, and coal industries.

For the same reason, we're supporting a range of initiatives by Stuart Energy Systems in developing the refuelling appliances to produce hydrogen for zero-emission fuel cell vehicles.

It's for the same reason that we're helping the City of Sudbury to develop a district energy system to serve general public buildings.

That's why we're involved with the Province of Alberta to enhance the production of methane by injecting carbon dioxide into the province's deep coal beds.

That's why we're supporting the new millennium electric project in Montreal to test the reliability of battery-powered vehicles.

All of those are initiatives that we have underway, among many others that I could mention.

I would point out that in the budget there was approximately $625 million in new money aimed toward the search for sensible solutions to the climate change challenge. This funding comes in a variety of forms, but all of it, in one way or another, is related to innovation and technology. Let me just list the subject heads, and if members are interested in more detail we can certainly go into it.

We have $100 million for the establishment of the new sustainable development technology fund; $150 million for the renewal of the Climate Change Action Fund; $60 million for the advancement of energy efficiency and renewable energy programs; $125 million to promote activities related to climate change with Canadian municipalities, including the introduction of new technologies; $15 million for the further development of markets for green power; $60 million for detailed scientific work with respect to climatology; and $115 million for use in the global arena, including the introduction and transfer of Canadian technology internationally.

Beyond climate change, in the budget we also addressed issues related to forestry, with $15 million for Canada's three major forestry research institutes, Forintek, FERIC, and PAPRICAN. These institutes, as you will know, were facing some difficulty in their financing. I'm glad that the budget has provided this necessary amount to help resolve the difficulties they were experiencing, to make sure their critical mass of intellectual capital can continue to be applied and expanded in relation to forestry issues.

I would also note that the budget included $90 million to improve the regulatory regime with respect to biotechnology, part of which will apply in relation to forestry, and $160 million for genomic initiatives, again part of which will apply in relation to forestry.

The mining industry also received a boost in the budget. We have earmarked $5 million a year, over three years, for a targeted geoscience initiative. This is one of the priorities that organizations like the Prospectors and Developers Association of Canada have constantly referred to as an area that is of priority concern. We have been able to earmark some additional funding to advance our geoscience in relation to mining activity and information for Canadians.

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I would also note an item that is not explicitly in the NRCan estimates but is very important to NRCan. Approximately $200 million is being devoted in a pan-government way to issues that are related to program integrity, especially on questions of public health and safety and the environment. A portion of that funding will assist in the refurbishment and improvement of laboratories that are of critical importance to Natural Resources Canada.

Mr. Chairman, I'll stop there. I hope I've been able to convey basically three messages.

Number one, the natural resources sectors of this country are of enormous economic, environmental, and social importance to Canadians, and they are extremely sophisticated in their application of existing and new technologies.

The second message is that we are already achieving significant progress in the advancement of science and technology in the natural resources sectors through the support of the Government of Canada.

The third message is that with the incremental funding provided in the budget, we will be able to launch progressive new initiatives that will help to support the further sophistication and development of these very fundamental industries for Canada's future.

The Chair: Thank you, Mr. Minister, for a most succinct summary of what is obviously a very complex portfolio.

I'm going to turn to colleagues, who will direct questions to you, as I'm sure you're familiar with. I'll start with Mr. Chatters.

Mr. David Chatters (Athabasca, Canadian Alliance): Just before we start, Mr. Chairman, could you briefly give us an idea of how the rotation is going to go? I wanted to share my time with Werner and I was just wondering.

The Chair: I'll give Werner lots of time. We'll go as we've always gone, five minutes, more or less, back and forth.

Mr. David Chatters: Good.

Welcome, Mr. Minister. You certainly don't have to sell me on the value of natural resources and the advancement of scientific and technological investment—

Mr. Ralph Goodale: Good.

Mr. David Chatters: —because in my riding it's—

Mr. Ralph Goodale: Pretty fundamental.

Mr. David Chatters: —mainstream, yes.

But in view of what's been going on in the House and in government in the human resources development department, I did, through access to information, receive a list of contributions and grants from your department. While some of them clearly are attempts to do just the things you've talked about—to encourage research and new technological development—some of them I really have a hard time understanding, such as when you're giving a $42,000 grant to the Annapolis Royal Nursing Home, for example, or $55,000 to a number of different libraries for interlibrary loans. Surely you're returning your books more promptly than that to the libraries.

You have the Hotel Association of Canada, Canadian Tire, and Zellers. For all of those things, you really have to wonder how they could be the responsibility of your department. I just wanted you to comment maybe a little on that.

Mr. Ralph Goodale: Mr. Chatters, I would be happy to. Quite frankly, if there are any specific grants or contributions about which you would like further detail and written explanations, we'd be happy to do that.

In reference to the items you've referred to briefly, if my memory serves me correctly—and I don't have the material before me at the moment—in the Zellers case you referred to, I believe they are a participant in our commercial buildings initiative, which means that they make a commitment to us to incorporate the most sophisticated building standards for energy efficiency reasons and then undertake to replicate that system over and over again in their new building construction.

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The purpose here is to get built into the corporate psychology and the conduct of architects, engineers, and people who are putting up major new commercial facilities, to build right in from the ground up, the best energy efficiency techniques so this becomes, if you will, over time just second nature in terms of how we construct new buildings in this country.

The commercial buildings initiative has been a very successful one. It's still relatively new, in our experience, but so far it appears to be working, in getting more and more new facilities constructed according to the highest standards.

Mr. David Chatters: I agree.

Mr. Ralph Goodale: A name like Zellers may appear to be a funny name to be on an NRCan list, but I would just make the point that if you have any odd names like that on which you'd like further explanation, we would be happy to provide it.

Mr. David Chatters: Certainly, and I may do that.

The new building initiative is a good one, but my understanding of the program is that different suppliers, different construction people, would take these contracts to improve energy efficiency in buildings and get paid out of the savings in energy over a number of years after the building was in operation and there was huge energy saving potential. If that's the explanation for some of these strange ones, why is Natural Resources Canada investing those kinds of dollars in a company that is supposed to get paid for the project out of the energy saved?

Mr. Ralph Goodale: To a certain extent I think you may be confusing two different programs. One is the federal buildings initiative, which we use internally within the Government of Canada to retrofit buildings and thereby achieve energy savings. We obtain a payback over a period of years because it costs us less to run those buildings.

The commercial buildings initiative deals with commercial buildings, not government buildings. It doesn't deal with retrofits, but actually builds new facilities from the ground up. It is also a communications tool. More than just getting one building properly done, we are using this initiative to try to spread the word more effectively among commercial builders, architects, engineers, and others that this just makes good common sense. You can look at it as seed money or incentive money to get the right kind of conduct more pervasive throughout the commercial building sector.

Obviously after we have developed a body of experience with this program, we will evaluate the return on our investment to see the degree of payback we have achieved in terms of more and more commercial building activity being planned right from day one, according to the best energy standards, and how far that permeates through the commercial building sector.

Mr. David Chatters: So it's specific—

Mr. Ralph Goodale: Yes.

The Chair: I'll have to come back to you, Mr. Chatters. Sorry.

Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman.

Minister, I just want to change gears a little and go to the Kyoto commitment. I know your ministry interacts with Environment. In this case, the climate change secretariat is assembling the tables now, and I suppose Mr. Oulton is trying to distil them as best he can.

I wonder if you could explain, first of all, your climate change relationship with Environment. Secondly, what happens to the secretariat's report to you once you get it? What will you do, and when do you expect to be doing it?

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Mr. Ralph Goodale: The challenge of climate change is obviously enormous. It is horizontal in nature, in that it engages and implicates virtually every department of the Government of Canada, as well as provinces, municipalities, the private sector and non-governmental organizations. It is really the classic case of a critical national and international file that requires effective horizontal management.

There are three ministers in the Government of Canada who carry particular responsibility for this. It has an international dimension, obviously, so Foreign Affairs and International Trade is involved, through Minister Axworthy. It clearly has environmental implications and objectives, therefore Minister Anderson is very closely involved. It also has very significant implications for the natural resources sector.

Because I am Minister of Natural Resources and chair the economic committee of cabinet, it is my responsibility to lead on those issues that relate to domestic implementation of our international obligations. That necessarily means very close working relationships with Minister Anderson and Minister Axworthy, because none of this can be done in isolation or in a unilateral fashion.

It involves very close relationships with every other minister in the Government of Canada, including the Minister of Agriculture, the Minister of Industry, the Minister of Transport, the Minister of Public Works and Government Services, and on and on it goes. It also involves very close relationships with our provincial counterparts; the Canadian Federation of Mayors and Municipalities; municipal governments across this country; the private sector, which has invested an enormous amount of brain power and intellectual capital in bringing solutions to the table; and the scientific community, non-governmental organizations and others.

In my two capacities as Minister of Natural Resources and chair of the cabinet committee for the economic union, while I carry the lead responsibility for domestic implementation, it obviously involves very close collaborative activity with all others that need to be part of the equation leading toward solutions.

We have had, as you mentioned, an important process up and running for the last 18 months. It has involved 16 different issue tables and 450 experts representing every walk of Canadian life. It has worked on every dimension of the climate change challenge, vertically by different economic sectors, and horizontally by way of cross-cutting themes. It has looked at the climate change issue from every conceivable point of view, to develop for governments a menu of possible policy options that ministers of energy and the environment federally and provincially could choose from in a fully informed and solidly analysed way.

We held a meeting of federal, provincial, and territorial ministers of energy and the environment at the end of March. I can check on the exact date. We began to receive input from the issue tables, as presented to us, as you mentioned, through the climate change secretariat.

We have agreed, coming out of that meeting, on the essential elements of a national implementation strategy. We've agreed that we should operate, by way of rolling three-year business plans. We've agreed to examine the nature of an overarching framework agreement that would deal with the manner in which governments related to each other in bringing all of this together, obviously respecting all of our respective jurisdictions federally and provincially.

Ministers will meet again in the fall to consider those very items. We hope to have before us at that time the framework agreement, the clear elements of the national implementation strategy for ratification, and the first elements of the business plan for the first three-year period. It's a complicated challenge. It is by no means easy for any of us, but I'm pleased that there is a solid degree of will to come together on this issue and deal with it effectively.

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I regret that at the latter stages of the last meeting of ministers, the Quebec minister found it necessary to leave the table. But I make this point: he left to signify that his concern was not that he didn't want to participate, but that he wanted to move more quickly. So it wasn't an indication of dissent on his part or disagreement with what we were trying to do. He just wanted to do more faster, and in that respect I hope we will continue to have that good working relationship with Quebec on this file. Quebec in many ways is very progressive in dealing with these environmental concerns.

The Chair: I hope to have a good working relationship with all colleagues, so I have to cut this one off and go over to Mr. Cardin.

[Translation]

Mr. Serge Cardin (Sherbrooke, BQ): Good day, sir. It's true that sometimes, the tendency is to want to go faster and farther.

I'd like to focus for a moment on a newspaper article that I read yesterday about the Kyoto agreement. The article notes that the terms of the agreement will not be respected. A meeting was held and means of sequestering greenhouse gas emissions were discussed. You talked about the forestry sector. Apparently, Canada would like a record to be kept of the forests' rate of growth to better gauge the impact of greenhouse gases. However, this would not take into account the systematic logging, and in some cases the clear cutting, that goes on in certain situations. Researchers also tell us that the political decision-makers hope to sequester carbon from the atmosphere. However, a much better approach would be to try and directly reduce emissions produced by automobile exhaust systems or by power plants. You referred to different initiatives that have been proposed to reduce greenhouse gas emissions. Theses, however, seem rather moderate in scope.

There has been much talk of gas recently, given the increase in prices. The federal government's tax revenues have increased, as will the tax revenues of the Western oil companies. Therefore, fairly substantial sums of money are available. My rapid calculations show that a surplus of about $5 billion per year in taxes should flow into the federal government's coffers. Five billion a year - that's a great deal of money. Isn't there some way of speeding up the research into alternative energy sources or into other areas to lower greenhouse gas emission levels as quickly as possible?

[English]

Mr. Ralph Goodale: Mr. Cardin, I think your points get very directly back to the theme I was referring to in my opening remarks. In order for us as Canadians to maintain all of the huge economic advantages that flow from our natural resources and at the same time meet the environmental and social expectations that Canadians and others have of us, we all need to invest intelligently in new science and new technology.

On a challenge like climate change, there is no one single silver-bullet solution. What will be required is a complex matrix of activities. There is a common denominator, a common theme through all of those activities, whether it is greater energy conservation; greater energy efficiency; more diversification among our energy sources; more use of renewable and alternative fuels; more activity of the nature of cogeneration facilities; improved industrial processes; the proper application of our international flexibility tools; sequestration of carbon, storage of carbon, whether that is by natural means through forest sinks and agricultural sinks or industrial means like injection in the coal seams or injection in old oil patches and so forth. Every one of those techniques will require new technology and innovation. That is why in this budget, on top of the investments we've made in the past, we have committed the incremental amount of $625 million.

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In 1998, when we first introduced the Climate Change Action Fund, we said we considered this to be a small down payment, an initial instalment on the kind of investment we would need to make for the future in science and technology related to climate change. We said again, in relation to budget 2000, where we brought on the incremental $625 million, that this is another good and useful step along the way, but obviously in due course more will be required.

We are determined to make those funding decisions as we go along on the basis of the very best available information so that we can apply our financial resources intelligently and with the greatest possible effect. We're satisfied that on top of the funds we have already invested, the new moneys we are now making available will in fact be used for good purposes and bring good results.

Again, just to summarize, we have a new sustainable development technology fund that has an initial contribution of $100 million, the full renewal of the Climate Change Action Fund for an incremental $150 million, energy efficiency and renewable energy initiatives valued at $60 million, funding to stimulate action at the municipal level and partnership with the Canadian Federation of Mayors and Municipalities at $125 million, incentives for green power initiatives at $15 million, the science of climatology at $60 million, and global activities at $115 million. That's a total of $625 million altogether. I believe I'm correct in saying that is the largest investment ever. It's incremental to what we have done before, and I have every confidence that we will make the appropriate future decisions to add to that investment in a way that will place it on a very solid foundation, bringing results to Canadians both environmentally and economically.

The Chair: Mr. Godin.

[Translation]

Mr. Yvon Godin (Acadie—Bathurst, NDP): Minister, mention has been made of greenhouse gases, of the Kyoto agreement and of the problems that have arisen over enforcing the terms of the agreement. I want to discuss with you a problem that I've broached in the past, namely the lack of a natural gas distribution system in northeastern New Brunswick. I think it would be a good thing for the federal government to work with the province on extending the natural gas pipeline into northeastern New Brunswick, where various industries are located, including Miramichi Pulp & Paper, Brunswick mine, Stone, NBIP, the Atholville plant, the Belledune smelter and the Belledune power plant. There are no such industries in Moncton, and only one plant in Saint John. Wouldn't it be a good idea to make an investment in the northeastern part of the province? We were all surprised to note the investments in Zellers. Perhaps similar investments in Canadian Tire and Wal-Mart will follow. Finding the money isn't the problem. Why not invest in the right location to protect our environment?

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What would an investment of this nature mean? It would help to promote economic development in our region, where over $69 million in EI benefits are paid out every year. This money could be used instead to bring a natural gas pipeline to the area, creating jobs in the process and benefiting the environment.

Sir, you were upset with me one day in the House of Commons. I referred to an article stating that you had nothing but good things to say about the natural gas pipeline. You stated that it had the potential to create jobs, that it represented the future of our country and that it linked our nation from coast to coast. However, our region is not serviced by this gas pipeline and therefore reaps none of the potential benefits. I would appreciate hearing your views on the subject.

[English]

Mr. Ralph Goodale: Well, Monsieur Godin, there certainly was a period of time some years ago when the Government of Canada was actively involved in the development of a whole range of energy megaprojects. It was almost common practice for that government investment to be there. In some cases it related to the development of pipelines and in other cases it related to other forms of energy development.

In 1995, that policy of government intervention in relation to energy megaprojects was changed. In fact, it was announced in the budget of 1995 that as part of the necessary effort to re-establish fiscal responsibility, the Government of Canada would no longer be participating in those kinds of megaprojects. In the ones we had previously been in, we would withdraw in a reasonable and orderly manner and we would not engage in those sorts of investments in the future. That was partly based upon the disciplines of fiscal responsibility. The financial resources to do that sort of thing were simply not available.

Secondly, this change in policy was consistent with the view of the vast majority of the private sector involved in the energy business that these various projects should proceed on the basis of their economic merit and that the economics of these projects should not be contorted or distorted by some degree of government involvement. That has been the policy since 1995.

In relation to pipelines in New Brunswick and the interconnections between Quebec and New Brunswick, I've noted that the premiers of those two provinces have entered into an understanding to try to facilitate that kind of activity. They have at the same time underscored and agreed and said publicly that economic viability is in fact critical to the success of the projects they have in mind.

I would also note a very strong statement that was made a bit earlier by Premier Bouchard, who indicated that these matters should not be matters of political dispute or interference, but should be based upon the marketplace, with the appropriate economic-based decisions being taken by the appropriate regulatory authorities.

I would certainly welcome the expansion of our core network of natural gas distribution, but I do make the point that it does need to be based upon sound economics and upon the ability of the marketplace to support the pipeline extensions that are being contemplated. That is the sound basis upon which it needs to go forward.

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The Chair: Mr. St. Denis.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chairman.

Thank you, Mr. Minister, for being here. I think it would be difficult to find anywhere in the country more applied science and technology under one roof than you find at Natural Resources Canada. I believe it supports what you said in your opening remarks, that the natural resources sector is very high-tech, and it's not the image of the hewers of wood and drawers of water that is still so much out there.

You mentioned Ms. Cooper. I certainly hope there are some science writers, science journalists, in the room. I'm sure you must feel frustration at times, because I know from watching the press releases that there's a lot of science and technology coming out of NRCan.

I wonder if you could just talk a bit about some of the initiatives, such as some of the Team Canada trips you've undertaken to help promote Canadian technology and applied science in the area of natural resources. I know some great efforts are being made there to let the world know, and I think by that and other means Canadians know how much is being done. In fact, your own senior officials are, I believe, in many cases science folks.

Mr. Ralph Goodale: Thank you, Mr. St. Denis.

I would begin on your last point. My favourite geologist is the new deputy minister of Natural Resources Canada, Dr. Harrison, and of course the staff complement at NRCan is a very professional staff, many of them with advanced qualifications in science.

I would highlight the fact that Dr. Everell performs the function of chief science adviser, in addition to being assistant deputy minister for the geosciences side of the department. We are assisted in that by advisory committees with respect to forestry, mining and minerals, energy, and geosciences, all of which come together in a ministerial advisory council on S and T activity within Natural Resources Canada.

So we have a very professional internal staff, led by very senior people, complemented with external advisers who come together on a regular basis to meet with all of my officials, sector by sector by sector, and to meet with senior overall departmental management to make sure we are getting the very best science advice we can get and making that crucial linkage between good science and good policy. That is a real challenge for government, to make that interface on a proper basis. I think, if I may say so, NRCan is doing it right, in terms of how to make those connections.

I'm pleased to say you will probably see in a future edition of Maclean's magazine, in a week or two, a feature article on this, not prepared by us, but prepared by others who have examined the sustainable development performances of Natural Resources Canada and indicate the kind of progress we are making.

On your question about international activity, this committee is engaged right now in a study that I think is very important and very useful—a range of forestry issues and sustainable development in forestry issues seen in the context of international trade. Those issues, if not properly managed, can indeed become trade impediments. It's critically important for us to be able to deal with that properly on the world stage.

There are many techniques we need to employ, but one of them is communicating with our potential customers and critics around the world to make sure they have a clear and accurate story about what natural resources development in Canada is all about, that we do it here to high standards of sustainable development, that we do apply the very best of innovation, science, and new technology, that we are world leaders in research and the development and deployment of the very best technologies.

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I have had the privilege now, as Minister of Natural Resources, to lead two international trade missions—one to Latin America, and the other one to Asia—with the participation of provinces, non-governmental organizations, and a broad cross-section of private sector interests. In every case, we try to represent every dimension of the sectors for which my department has responsibility: mining, forestry, energy, geoscience, and new technology.

I think these missions, coupling government leadership and private sector leadership, to critical markets around the world that are already significant customers and can become even more significant customers, that have investment potential in two ways, help us to communicate the message that in terms of raw, bulk commodities, Canada has a tremendous amount to offer. In terms of new science and technology expertise and know-how, we have a tremendous amount to offer. And in terms of value-added future development, we have a tremendous amount to offer. I find those messages are being very well received by our customers and trade partners wherever we go, and there's a real desire to do more and better business with Canada.

We will continue to pursue this in the genuine spirit of Team Canada, not unilaterally on the part of NRCan, but in close collaboration with DFAIT and other government departments federally, with all of the provinces and territories, in many cases with municipalities participating, with NGOs as part of the activity, and a with big contingent from the private sector.

The Chair: Thank you, Mr. Goodale.

That's a voting bell. We have about another 25 minutes to go. We're going to adjourn this meeting on time so everybody will have a chance to fulfil their parliamentary duties and obligations. That gives me sufficient time, Mr. Minister, to go to Mr. Werner Schmidt, who will have ample time to ask his vast questions.

Mr. Werner Schmidt (Kelowna, Canadian Alliance): I'm not sure how to interpret that, Mr. Chairman.

The Chair: Well, you know, if you ask an encyclopedic-type question, you get an encyclopedic-type response. I don't know if any of you have noticed that yet, but that could happen.

Mr. Werner Schmidt: We've been getting those kinds of answers all afternoon, Mr. Chairman. That's not new.

Mr. Ralph Goodale: And aren't you enjoying them?

The Chair: Oh, I thought I was the only guy who noticed.

That is a voting bell. It's a 30-minute bell; it's now gone seven minutes.

Mr. Werner Schmidt: I want to thank you, Mr. Minister and officials, for being here. Thank you, Mr. Chairman. I think it's good.

I'd like to restrict my questions and focus them rather specifically on a couple of pipeline questions. I wish I could ask all my questions, Mr. Chairman. We could be here for quite some time, because it is a very significant portfolio that we have before us.

I was looking at your annual report here for the National Energy Board. It referred particularly to the public inquiry concerning stress, corrosion, and cracking on Canadian oil and gas pipelines in 1996, I believe. Then in 1997 you had some ruptures, and some in 1999. In fact, they increased in 1999 over the previous year.

I noticed there's a particular pipeline and bridge that are involved here. I understand they're not in your group one group of companies; they're in your group two group of companies, and for some reason or other...I don't know. It's not a major pipeline, I guess, because that's how I read your appraisal. Perhaps you could straighten me out on that one—just what the difference is between a major pipeline and an “other pipeline”. It's classified as an other pipeline.

Just how effective is the National Energy Board in exercising its mandate to monitor and make sure the pipelines are indeed safe as they transport both oil and gas?

Mr. Ralph Goodale: Mr. Schmidt, I'd be very happy to respond to that question briefly today. What I would like to do is invite the National Energy Board, in response to your question, to provide you with explicit detail.

There have been a number of media reports and other commentaries over the last couple of years that have raised safety concerns in relation to pipelines. When I have examined the statistics on the incident reports that have been filed through the National Energy Board, I have found that contrary to the way in which this tends to get reported, the statistics would indicate that the causes of concern from a safety point of view are in fact going down, not up. The number of serious incidents is in fact declining, and the National Energy Board is very much on top of these matters insofar as they fall within federal jurisdiction. Some, as you know, fall within provincial jurisdiction.

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The information available to me would indicate the NEB is very much on top of this issue, and the statistics indicate a situation that is in fact improving. Dr. Harrison may have some more recent information, but let me just finish with my original thought.

If you could explicitly pinpoint the issues you're concerned about, I would make sure the NEB responds to you in detail so that you can be absolutely satisfied about this question. I don't want Canadians to have any doubt about the safety of that regulatory regime.

Dr. Harrison, do you have—

The Chair: Mr. Minister, could you give that response through the clerk so that the entire committee can have the answers?

Mr. Ralph Goodale: I will, yes.

Mr. Werner Schmidt: Should I give him the specific reference, Mr. Chairman?

The Chair: Do you want to have the answer from Mr. Harrison first?

Mr. Werner Schmidt: Sure, that's fine. Maybe he has the answer.

The Chair: Mr. Harrison, do you have a comment?

Dr. Peter Harrison (Deputy Minister, Canadian Forest Service, Department of Natural Resources): It's simply a supplementary, Mr. Chairman. In the report on plans and priorities of the National Energy Board, which this committee has seen, there is reference to the fact that the board is working to develop a set of key safety indicators to supplement those already in place. They're working very closely with other regulatory agencies, including the provinces, and also with the pipeline industry and key stakeholders. So I think they have taken this issue to the level they need to.

The Chair: Okay.

Mr. Schmidt, if you have a series of questions, I'm wondering whether—because we hear these bells going—you wouldn't prefer to have them listed for the minister and then have the response through the clerk, and maybe go on to other questions instead.

Mr. Werner Schmidt: Okay. Thank you, Mr. Chairman. I just thought it would be so much faster than going through access to information, because the minister is here.

The Chair: But he's already indicated he'll answer all of them.

Mr. Werner Schmidt: No, that's okay. Strike that.

Voices: Oh, oh!

The Chair: Oh, I see. I get it. It's a joke.

Voices: Oh, oh!

Mr. Werner Schmidt: The other question I have has to do with the replacement of resources that are being depleted, particularly gas and oil. The rate of addition of new discoveries of both oil and gas is not keeping pace with the consumption of oil and gas. I'm just wondering, are you as minister concerned about maintaining that balance? And if you are—and I'm sure you are, as we all are—what is being done to make sure that balance is in fact maintained?

Mr. Ralph Goodale: Obviously the challenge, Mr. Schmidt, is making sure new exploration and discovery is adequate to offset the existing pool of resources as those resources are depleted.

The National Energy Board, as part of its mandate, monitors both the depletion and the new exploration to determine a net potential supply balanced statement, if you will, for Canada. Their most recent report in detail on this subject was published, if I remember correctly, in the fall of last year. It gives an absolutely comprehensive overview of where they believe our supply situation sits at the present time. Again, thinking back some months to when I last reviewed it, there did not appear to be in that analysis by the NEB, which is the most expert analysis available, a serious cause for concern.

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Mr. Werner Schmidt: Well, I'm not raising a cause for concern here. I don't think that is correct. I think the demands are being met at the moment—

Mr. Ralph Goodale: Yes.

Mr. Werner Schmidt: —but there is an imbalance. The rate of consumption is greater than the rate of discovery. That's what I'm concerned about: to establish a balance between those two positions.

Mr. Ralph Goodale: That, I think, is why, in the normal course of events, you see companies launching into some brave new fields of exploration. It wouldn't have been all that long ago when exploration in the east coast offshore was considered to be a very venturesome, frontier type of activity. It's now developing into a huge economic development, which is valuable for Atlantic Canada and extremely valuable for all of Canada.

We've seen, over the course of the last year, much increased interest in potential activities in the Arctic and in the Arctic offshore, the northern offshore. Again, that interest was there, as you recall, 25 years ago. Then it dissipated. Now it's coming back again.

I think that reflects two things. It reflects the thirst on the part of the private sector to address that imbalance you referred to. It also relates to the changed economics of the situation, where those companies see enormous potential for development, which they would like to pursue, obviously consistent with the environmental, social, and aboriginal concerns that will need to be addressed—but there's a huge potential there.

I have great confidence, Mr. Schmidt, in our entrepreneurs in the energy sector to pursue these kinds of opportunities, to do so on a sound basis, and to make sure the balance continues to be appropriately in place.

I really shouldn't leave the topic without referring to Mr. Chatters' constituents—

Mr. Werner Schmidt: That's right.

Mr. Ralph Goodale: —in the oil sands, where there are reserves anticipated to be in place that rival those of Saudi Arabia.

Mr. Werner Schmidt: May I have one more question?

The Chair: No. I promised Mr. Godin I would give him one minute so that we can then close off and go to the House. Sorry.

Mr. Werner Schmidt: Okay.

[Translation]

Mr. Yvon Godin: Mr. Chairman, I'd like to continue focusing on the natural gas issue.

A policy change was made in 1995. That doesn't mean that today, in the year 2000, a better policy can't be brought in. I agree with you that a pipeline extension must be a viable project and that private companies will invest in viable locations. What this means is that a region like northeastern New Brunswick will never be viable because no company will want to locate its operations there if there is no natural gas pipeline. That's the problem. Think about what I'm saying. A natural gas pipeline means economic development and viability. If there is no distribution system in the region, companies will choose to locate elsewhere and we will miss the boat, so to speak. I concur with you that natural gas is important to the entire country. That's all I wanted to say.

The Chair: Thank you, Mr. Godin.

[English]

Mr. Ralph Goodale: Monsieur Godin, I certainly understand the enthusiasm for the extension of availability of natural gas in some parts of the country where it is presently not available. I would hope that the private sector developers and promoters would be able to see those opportunities and would put forward solid economic proposals that could be ratified and approved by the appropriate regulators, whether they be federal or provincial, depending on the circumstances of the case, in order to allow these projects to go forward.

I am concerned, though, that if we slip back into the era of megaproject subsidization, we would be on a very slippery slope that could turn out to be artificial in terms of its impact on the marketplace, distorting for others in the marketplace, and ultimately very expensive for governments at all levels.

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The Chair: I'll stop you there, Minister Goodale.

I'm sorry, I would like to give colleagues on both sides of the House another couple of minutes, but I dare say that if I keep you here any longer, nobody will be able to get back to the House in time.

Mr. Goodale—

Mr. Ralph Goodale: Well, who's there now? Can we count noses?

The Chair: Thank you very much. I want to thank your staff, Doctors Harrison and Everell, and Mr. Holden as well. We look forward to seeing you on another occasion, when I'm sure we will be as thorough as we have been today.

Colleagues, I want to remind you that our meeting is scheduled for 11 o'clock tomorrow, but we are in room 269, West Block.

The meeting is adjourned until tomorrow.